File No. 34208

This rule was published in the November 15, 2010, issue (Vol. 2010, No. 22) of the Utah State Bulletin.

Money Management Council, Administration

Rule R628-11

Maximum Amount of Uninsured Public Funds Allowed to Be Held by Any Qualified Depository

Notice of Proposed Rule

(Amendment)

DAR File No.: 34208
Filed: 11/01/2010 05:11:35 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this change is to allow the Council to have the option to reduce a qualified depository's uninsured public funds down to the amount that the institution is holding if there is a formal enforcement action against them by a regulator or if there is a material change in the depository's financial status.

Summary of the rule or change:

A subsection has been added that gives the Council an option to drop a qualified depository institution's public funds down to the amount they are holding at the time they receive a formal enforcement action or if there is a material change in the institution's financial condition, if the Council chooses to do so.

State statutory or constitutional authorization for this rule:

Section 51-7-18.1

Anticipated cost or savings to:

the state budget:

If the Council chooses to use this option in the event of a formal enforcement action or a material change in the financial institution's financial status, it will be done in the context of a normal Council meeting. There would be minimal mailing costs associated with a notification of the action to public treasurers but would be covered under current budgets.

local governments:

There will be no cost or savings to local government because the amendment does not involve any action by local government.

small businesses:

The change does not involve any action by small businesses.

persons other than small businesses, businesses, or local governmental entities:

The change does not involve any additional action by local government entities. It would not affect businesses.

Compliance costs for affected persons:

The change does not affect any additional persons.

Comments by the department head on the fiscal impact the rule may have on businesses:

There is no fiscal impact on business.

William W. Wallace, Chair

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Direct questions regarding this rule to:

Ann Pedroza at the above address, by phone at 801-538-1883, by FAX at 801-538-1465, or by Internet E-mail at apedroza@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

12/15/2010

This rule may become effective on:

12/22/2010

Authorized by:

William Wallace, Chair

RULE TEXT

R628. Money Management Council,
Administration.

R628-11. Maximum Amount of Uninsured
Public Funds Allowed to Be Held by Any Qualified Depository.

R628-11-4. Definitions.

For the purposes of this rule:

A. "Tier one capital" means:

(1) For a federally insured commercial
bank, thrift institution, industrial loan corporation or a savings
and loan association, the same as defined in the Federal Deposit
Insurance Act in CFR Chapter III Section 325.2 or the Office of
Thrift Supervision in CFR Chapter V Section 565.2;

(2) For a federally insured credit union,
the sum of undivided earnings, regular reserves, appropriations of
undivided earnings referred to as "other reserves", and
net income not already included in undivided earnings.

B. "Deposits" means: balances
due to persons having an account at the qualified depository
institution whether in the form of a transaction account, savings
account, share account, or certificate of deposit and repurchase
agreements other than qualifying repurchase agreements.

C. "Out of State" means: in
reference to a depository institution or depository institution
holding company, an institution or company whose home state is not
Utah.

D. "Maximum amount" means: the
amount of deposits in excess of the federal deposit insurance
limit.

E. "Qualified depository" means:
a Utah depository institution as defined in Subsection 7-1-103(36)
or a out of state depository institution as defined in Subsection
7-1-103(25) which may conduct business in this state under Section
7-1-702, whose deposits are insured by an agency of the Federal
Government and which has been certified by the Commissioner of
Financial Institutions as having met the requirements to receive
uninsured public funds.

F. "Transaction account" means:
a deposit, account, or other contractual arrangement in which a
depositor, account holder, or other customer is permitted, directly
or indirectly, to make withdrawals by check or other negotiable
instrument, a payment order of withdrawal, a telephone transfer or
other electronic transfer or by any other means or device to make
payments or transfer to third persons. This term includes demand
deposits, NOW accounts, savings deposits subject to automatic
transfers, and share draft accounts.

G. "Utah depository institution"
means: a depository institution which is organized under the laws
of, and whose home office is located in, this state or which is
organized under the laws of the United States and whose home office
is located in this state.

R628-11-8. Frequency of Adjustment to the
Uninsured Public Funds Allotment.

A. The uninsured public funds allotment
for each qualified depository shall be established quarterly by the
Council, based on the reports of condition filed with the
Commissioner as of the close of the preceding quarter. The
uninsured public funds allotments shall be established in
accordance with the following:

TABLE 3

Report of Condition Effective Date
As Of: of Allotment

December 31 April 1
March 31 July 1
June 30 October 1
September 30 January 1

B. The Money Management Council may make
interim adjustments in a qualified depository's uninsured
public funds allotment if material changes in a qualified
depository's financial condition have occurred or if there is a
formal enforcement action by the federal or state regulator. These
interim adjustments may include but are not limited to
:

(1) reducing a qualified depository's uninsured public
funds allotment to the amount of public funds held by the
institution at the time of the Council's review of either the
formal enforcement action or the review of the material changes
in the qualified depositories financial condition;

(2) reducing a qualified depository's uninsured public
funds allotment to zero if there is not sufficient collateral to
cover uninsured public funds.

C. Any qualified depository that becomes
subject to a formal enforcement action by any federal regulator
shall notify the Council within twenty-four hours of the
publication of the action taken by a federal regulator. Failure of
a qualified depository to comply with this requirement to notify
the Council may result in action taken by the Council to require
collateralization of uninsured public funds in accordance with
Section 51-7-18.1(5) and Section R628-11-7.

D. When a formal enforcement action has
been modified or terminated by a federal regulator, the qualified
depository shall notify the Council within twenty-four hours of the
publication of the modification or termination of any action.

KEY: financial institutions, banking
law

Date of Enactment or Last Substantive Amendment: [April 27], 2010

Notice of Continuation: October 12,
2010

Authorizing, and Implemented or
Interpreted Law: 51-7-18.1(2)

Additional Information

The Portable Document Format (PDF) version of the Bulletin is the official version. The PDF version of this issue is available at http://www.rules.utah.gov/publicat/bull-pdf/2010/b20101115.pdf. The HTML edition of the Bulletin is a convenience copy. Any discrepancy between the PDF version and HTML version is resolved in favor of the PDF version.

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For questions regarding the content or application of this rule, please contact Ann Pedroza at the above address, by phone at 801-538-1883, by FAX at 801-538-1465, or by Internet E-mail at apedroza@utah.gov.